eMarketer attributed the growth to the cost-effectiveness of programmatic ad placements, increasing advertiser familiarity with the automated bidding system and the need to better target prospects. The company projected that programmatic spending on display ads will continue to experience double-digit growth through 2017, when it will hit $8.69 billion and account for 29% of all U.S. digital display ad expenditures.
“Programmatic enables advertisers to reach audiences who are much more likely to be interested in a product,” Fredricksen said. “You don't use programmatic just to buy an ad on PCWorld, for example. It has to do with whomever just arrived at that site, the data and profile they fit in, their IP address, plus what their cookie says about them, and, for example, if they've also been to Cisco.com, Intel.com and IBM.com.”
Fredricksen said advertisers may still want to place ads on specific premium sites that are most appropriate to a particular topic. Also, a programmatic ad buy—which follows the user around the Internet regardless of site content—may not resonate with that user at a certain time and place, he said.
Programmatic ad buying—sometimes called real-time bidding, although RTB is just one component—has gone through a rapid metamorphosis in its short life. It rose to prominence with ad networks that aggregate unsold ad space from publisher sites and place ads suitably within the network. User demographics and target segments are also taken into account.
Ad exchanges take this further, taking unsold display space and auctioning it off to the highest bidder among advertisers, networks and agencies. Internet users are then served these ads wherever they might be on the Web, based on signals from their browsing behavior. All this is automated, in real time, based on a previously indicated bid—and so the expression “real-time bidding.”
“There are a lot of ways to look at this approach,” said Sean Muzzy, CEO of Neo@Ogilvy North America, the digital media and performance marketing arm of Ogilvy & Mather. “One of the big shifts has been an increased push toward more premium inventory. Larger publishers are more open to having those conversations.”
This has spurred the fastest mutation in the digital ad world, the advent of the so-called “closed fence” ad exchanges erected recently by a number of publishers. The reason: Instead of having their unsold inventory pushed off at low prices by third-party exchanges, premium publishers seek to maintain higher pricing by offering programmatic ad placements within their own network of brands.
Last month, News Corp., owner of more than 50 brands (including the Wall Street Journal, New York Post and MarketWatch), launched a private programmatic exchange to automate the placement of ads solely within its own media properties.
Federated Media Publishing, a network of independent brands that includes numerous technology sites, plans this month to launch a programmatic platform that will automate the buying and delivery of native advertising within its network.
The platform, which Federated calls Content Reachtargeting, will allow advertisers “to distribute ... stories to just the right people at just the right time, in just the right context,” said John Battelle, Federated CEO-executive chairman, in a recent blog post.
“The possibilities are quite diverse and very exciting,” Battelle wrote. “You could create concentric circles with branded content at the core, identifying audience members who have shared the content, viewed the content or simply visited sites where the content is hosted. ... Or you can narrow down your messaging to just those who have shared the branded content.
“Imagine that—intelligent banners that speak directly to an individual. It's now possible with the combination of content marketing and programmatic infrastructure.”
“Where this is getting interesting is leveraging some of the underlying technology capabilities that are part of the programmatic world for direct programs,” said Mike Kisseberth, chief revenue officer at TechMedia Network, a technology and science publisher that relies on programmatic advertising to reach subscribers to the publications in its network. Its brands include BusinessNews, Laptop, Tom's Hardware and TopTenREVIEWS.
Kisseberth said native advertising—the serving of ad units that resemble editorial content—is a natural for programmatic advertising in the tech world.
“Marketers will never move away from that deep dive, to connect with the audiences of specific publishers that have germane expertise and insights; but there is so much efficiency to the programmatic buying process and the ability to fine-tune the audience with real-time buying capabilities. We're all in on it.”